Oil drops from 15-month high on uncertainty over Russian stance

Bloomberg

Oil fell from a 15-month high amid uncertainty over whether Russia would join an OPEC deal to curb supply.
Futures fell as much as 1.4 percent in New York after climbing 3.1 percent Monday. Russia’s biggest producer Rosneft PJSC said it won’t reduce output, according to Reuters, after President Vladimir Putin said his country is willing to join efforts by the Organization of Petroleum Exporting Countries to stabilize the market through a production freeze or cut. If OPEC’s agreement to curtail output is implemented, supply and demand could come back into balance earlier than expected next year, the International Energy Agency said.
Oil rose to the highest in more than a year on Monday after Saudi Arabia expressed optimism that OPEC would work out a deal and Russia voiced its support. An increase to $60 a barrel would probably trigger a jump in North American production while trimming global demand growth, IEA Executive Director Fatih Birol said Tuesday. U.S. output has already halted its decline as higher prices revive drilling.
“It’s a bit of a cat and mouse right now,” said Michael Poulsen, an analyst at Global Risk Management Ltd. “It’s about the sentiment in the market and if there will be an OPEC deal to cut production and if Russia will join it. And it’s about when U.S. shale production starts rising again.”

ROSNEFT SKEPTICISM
West Texas Intermediate oil for November delivery traded at $50.77 a barrel, down 58 cents, on the New York Mercantile Exchange at 12:42 p.m. London time. Prices rose $1.54 to $51.35 on Monday, the highest close since July 2015. Total volume traded Tuesday was about 39 percent above the 100-day average.
Brent for December settlement fell as much as 71 cents to $52.43 a barrel on the London-based ICE Futures Europe exchange. The contract rose $1.21 to $53.14 on Monday. The global benchmark crude traded at a $1.35 premium to WTI for the same month.
Rosneft Chief Executive Officer Igor Sechin said he doubts some OPEC countries such as Iran, Saudi Arabia and Venezuela would cut their production, Reuters reported Tuesday, citing an interview. An increase in prices above $50 would make U.S. shale projects profitable, he said. Leonid Fedun, vice president of Russia’s second-largest producer, Lukoil PJSC, said the nation’s oil companies will unify behind their government if talks with OPEC result in an agreement.
OPEC pumped a record 33.64 million barrels of crude a day in September, the IEA said in a report Tuesday.
Returning volumes from Libya, Nigeria and Iran suggest that “bigger cuts” would have to be made by others, notably Saudi Arabia, to meet the production ceiling agreed in Algiers last month.
There may be a higher probability of an agreement between Russia and Saudi Arabia to cut production, but the deal may prove self-defeating if the resulting increase in prices boosts supply from other producers, Goldman Sachs Group Inc. said in a note on Monday.